UK: Queen's speech: Tax avoiders told to pay up front in new guilty-before-trial law

HMRC criticised for treating taxpayers as "guilty until proven innocent” by forcing people to pay up front if officials suspect them of tax avoidance under measures announced in the Queen's Speech

Taxpayers will be treated as "guilty until proven innocent” as HM Revenue & Customs gets the power to force them to pay up front if officials suspect them of tax avoidance.

Under plans announced in the Queen’s Speech, people using tax avoidance schemes will be made to make "accelerated payments” as part of plans to raise around £2 billion.

Treasury figures suggest that 65,000 people could be affected by the new powers. HMRC could raise a more than £2bn in all.

The most controversial aspect of the new plans is for the new rules to apply to a "legacy stock” of pre-existing cases, where people invested money in contentious schemes several years ago.

George Osborne earlier this year announced a major Government crackdown on tax avoiders following a series of high-profile cases involving celebrities including Gary Barlow, the Take That singer.

Mr Barlow, two of his Take That band mates and their manager face repaying tens of millions of pounds to HMRC after investing in schemes that a judge ruled amounted to tax avoidance.

As part of the plans, people accused of using avoidance schemes will be made to pay their tax up front while HMRC and the courts decide whether or not the arrangements are legal.

Experts have warned that it will lead to tens of thousands of potentially innocent British citizens being forced to pay their taxes before they are even due.

The all-party Treasury Select Committee last month expressed concerns about the plans for up-front payments to HMRC.

Neal Todd, corporate tax partner at Berwin Leighton Paisner, warned that the HMRC are acting as "judge and jury”.

He said: "We continue to have serious reservations about this. It’s causing a great deal of concern amongst clients, to be quite frank. The reason is that it gives the Revenue the power to come along to a taxpayer and ask for the money straight away.

"That worries people. In a sense the Revenue can think of a number – obviously they have to act reasonably – but they can decide what they think the right number is. That’s very different from going to a court and them saying, ‘On balance we have decided that you owe a certain amount of money’.

"For many people, the prospect that the Revenue can be judge and jury without going to tribunal…is very worrying and contrary to the normal rules of law and procedure.”

Tina Riches, national tax partner at accountancy and investment management group Smith & Williamson, added: "In some ways it flies in the face of the British justice system in that normally if there’s an issue you can take it court and an independent judge can decide.

"But if you’ve got to pay the tax up front before you can get anywhere near the court you could image that people could end up just deciding to pay the tax and not pursue what is actually a legitimate case.”

Mr Osborne earlier this year said: "If people feel they have been wronged, the can of course go to court. If they win, they get their money back with interest.”

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